NEW DELHI: The country's largest insurer, Life Insurance Corporation (LIC), may pick up 5 per cent stake in state-run power equipment maker BHEL in a block deal. The proposal initiated by the heavy industries & public enterprises ministry is now being processed by the disinvestment and financial services department of the finance ministry.

The ministry has been opposed to stock market sale of BHEL's share by the government under its disinvestment programme that has been drastically pruned to Rs19,027 crore from Rs54,000 crore budgeted initially."The proposal has come from the heavy industries ministry. All concerned departments are examining it," said a government official, adding that the proposal will be placed before an empowered group of ministers by early next month.A senior official with LIC told ET that they have been unofficially made aware of the developments. "Well, if the government asks us there is little choice we have," the official said, adding that such a proposal, however, will have to be approved by the insurer's board. "That is the way it has to be," he said.The company's scrip, which had touched a 52-week low of Rs100.35 in August 2013, has since recovered smartly. It closed at Rs159.5 on the NSE on Tuesday. A 5 per cent stake sale in the company may fetch the government around Rs2,000 crore. The government is expected to approach only LIC, as the stake to be divested is 5 per cent and even if LIC picks up the whole stake, it will not breach the insurer's investment limit."There is no other financial institution except LIC which will be investing in the company," said another government official, aware of the deliberations. In August 2011, the Cabinet had cleared selling government's stake in BHEL through a followon public offer (FPO), but the stake sale has not progressed because of opposition from admin-istrative ministries. The government holds a 67.72 per cent stake in the firm."Market conditions are not suitable for the moment for such a valuable company to be sold in the openmarket," heavy industries & public enterprises minister Praful Patel had said earlier this month ruling out stock market sale of company's shares.The finance ministry is counting on stake sale in the company to reach its revised target. "We expect to reach this target through IOC, BHEL and the proposed ETF," said a finance ministry official, adding that, so far, the government has garnered around Rs5,600 crore through divestment procceds. ONGC and Oil India will buy 10 per cent government stake in IOC which is expected to fetch around Rs5,000 crore.

Life Insurance Corporation (LIC) of India has reported Unitech to the Reserve Bank of India (RBI) as a wilful defaulter, a senior official at India’s largest life insurance confirmed.Unitech, India’s fourth largest real estate developer, has defaulted on a Rs 200-crore loan it took from the insurance behemoth in 2007. News regarding the developer’s loan default first came out in December, when it claimed that it had agreed to pay Rs 70-80 crore to LIC.When contacted by FE, Unitech stated that it stands by the statement it had issued to all stakeholders last week.“...requisite steps have been taken by the Company to ensure no pendency with the Life Insurance Corporation of India that will be reflected in the financial results and/or financial statements, which are due at the end of this financial year,” Unitech had stated in a notification to the Bombay Stock Exchange on Friday.Unitech has now joined the list of Indian corporates which have been identified as wilful defaulters by Indian banks due to delays in repaying loans.One way the RBI defines a wilful default is when the unit has delayed on its repayment obligations even though it has the ability to pay the lenders. A wilful default is also declared when the unit has delayed repayment but has not used the funds for the specified purposes for which the loans were taken. Moreover, if funds have been siphoned off or if the moveable fixed assets or immoveable property underlying the loan have been disposed off by the promoter, without the knowledge of the lenders, it’s considered a wilful default.In December, the central bank released a set of guidelines to curb the stressed assets in the banking system and outlined the treatment to be meted out to wilful defaulters. These steps would make it more difficult for such defaulters to get additional loans from banks.Unitech’s income from operations for the quarter ended December 31 stood at Rs 398.98 crore, up 57% from a year earlier. The company’s net profit for the quarter was down 41% from the previous year, at Rs 23.10 crore.

Claim Settlement Ratio 2011- 2012: LIC of India was top where lic settled more approx 98% claims. For people looking to buy a term insurance plan, annual premium charged for the term plan and claim settlement ratio of the life insurance company are two very important considerations apart from other important considerations like their specific need, product features, customer service of the company etc.

The share purchase has increased LIC’s share in SBI to 14.99% from 12.15% earlier, the lender said in its filing

Mumbai: Life Insurance Corporation of India (LIC) bought at least 41.3% of the total shares that State Bank of India (SBI) sold on 29 January as part of it’s qualified institutional placement (QIP) offering, the bank’s filing with exchanges showed.The share purchase has increased LIC’s share in SBI to 14.99% from 12.15% earlier, the lender said in its filing.SBI sought to raise Rs.9,600 crore via a share sale to institutional investors in the domestic market, but managed to raise only Rs.8,032 crore, as foreign investors largely stayed away from the offering.LIC picked up a lion share of the offering. The filing showed LIC bought 21,208,275 shares of SBI. The bank earlier had said it sold 51,320,436 shares at Rs.1,565 apiece, implying that LIC bought 41.325% of the entire offering.SBI stock ended at Rs.1,524 on the BSE, up 1.31% from previous close, while India’s benchmark Sensex Index rose 0.34% to close at 20,380.77 points

SUMMARYChennai-based public sector lender Indian Overseas Bank (IOB) is seeking shareholders’ nod to raise R398 crore from Life Insurance Corporation

Chennai-based public sector lender Indian Overseas Bank (IOB) is seeking shareholders’ nod to raise R398 crore from Life Insurance Corporation (LIC) on a preferential share allotment basis.The bank will allot 8,15,00,000 equity shares of R10 each for cash at an issue price of R48.84 per equity share (including a premium of R38.84), aggregating to R398.04 crore. The bank has called for an extraordinary general meeting (EGM) on February 26 to secure the shareholders’ approval.Though IOB’s capital-adequacy ratio had improved to 10.99% after the government's infusion of R1,200 crore, it still requires close to R1,000 crore to meet the capital requirement this fiscal under Basel III. With the bank geared up to get R398 crore LIC, it will also look to other avenues like perpetual bonds to fill the gap.In a communication to shareholders, the bank said that though the LIC had agreed to subscribe to equity capital of the bank on a preferential basis to the extent of R426 crore, it would be only allotting shares of R398.04 crore to restrict their holding within 15%. “The capital raised would be utilised to shore up the capital adequacy of the bank and to fund general business needs,” it said. Currently, LIC holds 8.75% in the bank and after the issue of shares, it will go up to 14.77%. The main promoter, the government of India, holds 73.8% in IOB while the remaining 11.43% is held by the public.IOB reported a 35.56% drop in its net profit at R75.07 crore for the third quarter against R116.50 crore for the same period of the previous fiscal year.

ndividuals seeking to buy a Unit-Linked Insurance Plan (Ulip) from the Life Insurance Corporation of India (LIC) may have to wait a little longer for this product to hit the market. This is because LIC is currently in a wait-and-watch mode towards the Ulip segment and focused on strengthening its traditional product portfolio.

New guidelines for linked and non-linked insurance policies were implemented in life insurance from January 1, 2014 onwards. These rules made changes in the product structure and surrender benefits, making the product more transparent for the customer.

Under the new norms, life insurance companies had to stop selling existing products and introduce new ones. LIC, too, withdrew its products from the market and introduced new guidelines-compliant variants of the products including money back plans.

However, there has not been any Ulip product launch in 2014 under the new guidelines. Ulips constitute less than 10 per cent of the total product mix of LIC and the rest comprises traditional life insurance products.

The last time the life insurer launched a Ulip plan was in January 2013, that too after a gap of two years. The product, 'Flexi Plus', was a unit-linked assurance plan which provided a lumpsum benefit on death and also the maturity benefit irrespective of survival of the policyholder. However, with the new product guidelines being implemented, this product had to be replaced.

LIC, which has planned to launch 15-20 products in the first phase of the new product regime, has filed only traditional products with the Insurance Regulatory and Development Authority (Irda) and no Ulips. A senior LIC executive explained there was no urgency to launch a Ulip.

In December 2013 as well, LIC’s chairman S K Roy had said the insurer’s priority is to get traditional products in place.

Ulips, which used to be a darling of investors, took a beating following stiff norms set by the insurance regulator in September 2010, mandating a minimum mortality cover and increase in the lock-in period from three years to five years.

As a result, Ulip premiums, which accounted for 90 per cent of the first-year premium of life insurance companies, saw their share fall to less than 30 per cent. Recent data shows that the share of Ulips in LIC’s new premium is less than 10 per cent, down from over 70 per cent in the pre-2010 period.

However, LIC customers, especially the technology-savvy ones, have reason to cheer. For, the insurer has already filed an online term plan with the insurance regulator and, once approved, customers can purchase it online. The insurer already has an immediate annuity plan, Jeevan Akshay VI, which is fully online.